3/1/2007

1. This study examines and analyzes the terrorism directed against Israel, which continued during 2006 as a central factor influencing the agenda of the State of Israel. It examines the activities of the Palestinian terrorist organizations, Hizbullah and the global jihad, and compares their modus operandi with previous years. It also deals with the support given by Iran and Syria to the terrorist organizations operating against Israel as well as other factors influencing the extent and nature of anti-Israeli terrorism.

2. During 2006 the number of terrorist attacks carried out by the Palestinian terrorist organizations constantly continued to decline, especially suicide bombing attacks, despite the fact that motivation to carry out such attacks has been increasing. The decline in the number of suicide bombing attacks is a result of many factors, the most prominent of which are the successful counterterrorist activities of the Israeli security forces and Hamas's policy of restraint, which because of political considerations, kept them from focusing their efforts on such attacks.

3. During 2006 abductions and rocket fire replaced suicide bombing terrorism as the dominant factor of the campaign against Israel. Abductions and rocket fire are less lethal than suicide bombing attacks, but their consequences have long-term strategic influences on the internal Israeli arena, on the Lebanese arena and on the entire Middle East, and those influences will continue to make themselves felt in Israel through 2007.

4. In 2006 events focused on two separate abductions of IDF soldiers. The most significant, which took place at Zar'it on the Lebanese border, was carried out by Hizbullah according to a modus operandi familiar from past attacks. Israel's uncompromising response caught Hizbullah by surprise and led to the 33-day second Lebanon war. The war temporarily overshadowed the Palestinian terrorist campaign and forced Israel to transfer its attention and efforts to the northern border. The other abduction, carried out by Hamas in collaboration with two other terrorist organizations, also escalated the confrontation and resulted in forceful IDF actions in the Gaza Strip for the first time since the disengagement of August 2005.

5. The second Lebanon war enabled Hizbullah, for the first time, to use its massive arsenal of advanced weapons (provided by Iran and Syria) against both Israel's civilian population and the IDF. Especially menacing with respect to offensive capabilities were the massive volleys of rocket fire directed at civilian population centers in Israel on every single day of the fighting, a total of approximately 4,000 rockets which hit targets as far south as Hadera. Defensively, Hizbullah's advanced anti-tank missiles were effective against Israeli ground forces in south Lebanon , as was the attack of a Chinese-made C-802 rocket fired at an Israeli Navy ship.

6. During the war the IDF succeeded in destroying some of Hizbullah's long-range rockets, caused extensive damage to the organization's military infrastructure and created a new situation in south Lebanon. The manifestations of that new situation were the transfer of three Lebanese army brigades to the south, the upgrading of the UNIFIL forces and pushing Hizbullah posts further back from the border. Nevertheless, Hizbullah continues to foster the myth that it was “victorious” in the war, based on its success to activate its rocket arsenal throughout the war and the Israeli failures, both in the way the army was put into action and on the home front. That has made it necessary for Israel to rethink and reorganize its military and political systems, based on the lessons of the war (a process which is still in progress). Hizbullah as well began, with the aid and support of Iran and Syria , reconstructing its damaged operational capabilities.

7. Hizbullah's rocket and missile capabilities in the second Lebanon war served as a model for the Palestinian terrorist organizations, which make every effort to acquire advanced weapons, especially long-range rockets and anti-tank missiles. That is part of the buildup project currently being undertaken in the Gaza Strip, especially by Hamas, and which accelerated after the disengagement and Hamas's rise to power.

8. As part of the project, during the past year Hamas and the other terrorist organizations have organized themselves in a quasi-military fashion, with both offensive and defensive elements. One aspect was a new military framework was established this year under the aegis of the Hamas government's interior ministry, called the Executive Force. In addition, there have been massive amounts of weapons smuggled into the Gaza Strip mainly through a system of tunnels dug along the wide-open Philadephi route, including 122 mm Grad rockets and Konkurs second-generation anti-tank missiles. Massive amounts of homemade weapons have been manufactured, including rockets, anti-tank weapons and explosive devices; terrorist-operatives have received extensive training both in the Gaza Strip and abroad (Lebanon, Syria, Iran); and an enormous number of underground bunkers and tunnels have been built for both offensive and defensive purposes.

9. So far, the post-disengagement efforts of the terrorist organizations to copy the buildup process (including the ability to fire mortars and rockets) in Judea and Samaria have failed, principally because of Israel's counterterrorist activities. However, despite the blows inflicted on the terrorists in Judea and Samaria, they continue to try to dispatch suicide bombers to carry out attacks in Israel. The Fatah and PIJ infrastructures in Nablus and Jenin, which are directed by external headquarters, continue as foci of terrorist activities in Judea and Samaria even though in 2006 their operational capabilities were inferior to those of former years.

B. Comparison between 2006 and the previous years

1. Since September 2000 the Palestinians terrorist organizations have waged an unremitting terrorist campaign against Israel (called by the Palestinians “the second intifada” or “the Al-Aqsa intifada”). During the campaign, which has been unprecedented in both extent and force since the beginning of the Israeli-Palestinian confrontation, terrorism has spiraled up and down and from time to time the terrorist organizations have made significant changes in their methods.

2. The peak of the terrorist campaign was during 2001-2002, and since then number and deadliness of the attacks have been in constant decline , although both formally and practically the confrontation has not ended. Attempts to formulate and adhere to partial or full ceasefire agreements have so far been unsuccessful because the PIJ and other organizations stubbornly continue carrying out attacks.

3. During 2005, in view of the disengagement, an internal Palestinian agreement was reached regarding a “lull in the fighting” which was never fully implemented and ended in January 2006. On November 25, 2006, PA chairman Abu Mazen and Israeli Prime Minister Ehud Olmert reached an agreement regarding a ceasefire in the Gaza Strip. The terrorist organizations did not implement that agreement either, and to a certain extent terrorism from the Gaza Strip ratcheted up a notch with the suicide bombing attack in Eilat in January 2007.

4. The terrorist campaign waged against Israel by Hizbullah, which began while the IDF was in Lebanon for the first Lebanon war (1982-1985), continued during the era of the "security zone" (1985-2000). After the IDF left south Lebanon in May 2000 a new stage began: Hizbullah began accelerating the construction of its broad military infrastructure, particularly south Lebanon, kept up a controlled degree of tension along the border by means of sporadic attacks (attacks on IDF posts, abducting soldiers, firing rockets and mortars at Israel, and supported the Palestinian terrorist organizations in the PA with money, weapons and training.

5. Israel's response was to adopt a policy of restraint intended to contain Hizbullah attacks and made do with treating the problem through the intervention of the international community. Such a policy enabled Israel to focus most of its efforts on Palestinian terrorism, which overshadowed the Hizbullah threat until the second Lebanon war and prevented deterioration along the Israeli-Lebanese border. Hizbullah policy was to continue the attacks while keeping the tension from boiling over. That, along with Israel 's policy of restraint generally enabled the settlements along Israel 's northern border to live their daily lives in a routine fashion during the six years after the IDF's withdrawal from Lebanon. The price, however, was granting Hizbullah a free hand to construct a broad military infrastructure.

6. The abduction of two IDF soldiers on July 12, 2006, radically changed the situation which had lasted for six years. Israel abandoned its policy of restraint and, to Hizbullah's surprise, responded forcefully (as Hassan Nasrallah publicly admitted after the war). Thus the abduction, which Hizbullah viewed as “playing by the rules,” and which they expected to produce a limited, localized Israeli response, turned into a full-fledged war between Israel and Hizbullah, leading to the creation of a new situation in south Lebanon and new “rules of engagement.”

1. Four main factors, in our assessment, influenced the nature and extent of Palestinian terrorism in 2006, which was and is one of the main threats facing the State of Israel:

A. The effectiveness of the counterterrorism measures taken by the Israeli security forces in Judea and Samaria: During 2006 the Israeli security forces conducted intensive counterterrorism activities which included the detention of wanted terrorists, the exposure of weapons and the killing of terrorist-operatives who resisted detention. That successful activity severely damaged the terrorist infrastructures, both the leadership and the rank and file. In addition, along with the completion of many sections of the security fence (which has proved its effectiveness), it also led to an additional decline in the number of suicide bombing attacks and forced the terrorist organizations to make do with relatively simple attacks such as shootings and stabbings. At the same time, there was a sharp rise in the number of rockets launched from the Gaza Strip (where the terrorist organizations enjoy unfettered freedom of action) at Israeli population centers in the western Negev “in compensation” for operational difficulties in Judea and Samaria.

B. Dramatic developments in the internal Palestinian arena, the most important of which was the Hamas takeover of the Palestinian government after their victory in the Palestinian Legislative Council elections. That resulted in unending power struggles between PA chairman Israel Mazen and Hamas prime minister Ismail Haniya, and violent clashes between Israel and Hamas which led to increased anarchy in the Gaza Strip and the collapse of government institutions. Those events hampered the operational capabilities of the terrorist organizations and sometimes turned attention (especially that of Hamas) to internal Palestinian struggles for power and survival at the expense of terrorist activity against Israel . Hamas's government commitments were also a restraining factor. Therefore, in our assessment, the cocktail of internal Palestinian developments was an important factor contributing to the decline in volume and change in nature of Palestinian terrorism during 2006. It is particularly worthwhile mentioning Hamas, which kept from focusing on suicide bombing terrorism and left the field open to the PIJ.

C. The Israel's intensive activity in the Gaza Strip, which increased after Israel soldier Gilad Shalit was abducted: That activity included infantry and armored operations in the northern and southern Gaza Strip and targeted killings carried out by the Israeli Air Force: senior terrorist-operatives were killed; arms storehouses and workshops for the manufacture of weapons were attacked; terrorist bases, training camps and terrorist organization offices were attacked; suspects were detained; and tunnels used for smuggling weapons were exposed. In addition, for the first time since the disengagement, two broad operations were carried out targeting the terrorist infrastructure: Operation Summer Rain during Israel and August, and Operation Autumn Clouds, in October and November. The Israel's activity in the Gaza Strip made it hard for the terrorist organizations to continue the buildup and carry out terrorist attacks. However, it did not lead to the release of Gilad Shalit or a decrease in the amount of rocket fire, but rather spurred the terrorist organizations on to increase their efforts to launch rockets during Israel operations as the only response possible to Israel activity .

D. The second Lebanon war temporarily distracted Israel 's attention from the Gaza Strip and focused it on the northern border. During the war, Hizbullah attempted to activate the Palestinian terrorist organizations it supports to carry out abductions and suicide bombing attacks against Israel to open a second front. Their efforts failed, however, because of the efficacy of the Israeli security forces' counterterrorism activities. After the war the Palestinian terrorist organizations, especially Hamas, made efforts to upgrade their weapons and other military capabilities, primarily standard rockets, such as the Grad (122 mm), and advanced anti-tank weapons (such as Konkurs missiles). That was done to create a balance of deterrence with Israel based on the model Hizbullah created in Lebanon.

D. Iranian and Syrian support for the terrorist organizations

1. Iran and Syria, two states which sponsor terrorism and are subject to increasing pressure from the international community, view the terrorist campaign waged by the Palestinian organizations and Hizbullah as an effective tool to harm and weaken Israel. The support they give the organizations and their terrorist campaign are also effective measures to strengthen the Iranian and Syrian regimes and the Iranian-Syrian axis (“the axis of evil”), to advance and increase the influence of both countries in Lebanon and the Arab-Muslim world and to strengthen their position versus the United States and the international community.

2. Considering Hizbullah as an important strategic asset, Iran and Syria helped it established an enhanced military infrastructure in Lebanon , turning it from a guerilla terrorist organization into an organization with military ground capabilities similar to those of a sovereign state. The infrastructure included a defensive deployment and offensive options in the form of an enormous (more than 20,000) rocket arsenal, which was prematurely activated during the second Lebanon war. Since the war both Iran and Syria have helped Hizbullah rehabilitate its military capabilities, which had been partially destroyed. Conspicuous was the large-scale smuggling of arms from Syria into Lebanon (especially south Lebanon ) in clear and direct contravention of the provisions of Security Council Resolution 1701.

3. The rise of Hamas to power in the PA and the achievements of Hizbullah in the second Lebanon war strengthened the positions of both organizations Iran and Syria. During the second half of 2006 both countries were conspicuous in their efforts to rehabilitate Hizbullah's military infrastructure in Lebanon, as was Iran 's immense involvement in compensating Shi'ite Lebanese residents and in rebuilding Shi'ite areas damaged during the war. Conspicuous as well was the generous financial aid Iran promised Hamas prime minister Ismail Haniya ($250 million and aid for development projects) during the latter's December 7-11 visit to Tehran , and the frequent summit meetings held by the heads of the Syrian regime and the Hamas leadership.

4. In addition to the above, during 2006 Iran and Syria continued their “ordinary” aid to the Palestinian terrorist organizations at the “traditional” levels: direction of the activities of the terrorist organizations in the PA-administered territories continued coming from the terrorist organizations' headquarters in Damascus, especially from the PIJ and Hamas's “external” headquarters (the latter has become a dominant factor in Hamas's internal balance of power); Iran's funding for the activities of the terrorist organizations (especially the PIJ); providing the Palestinian terrorist organizations with weapons to be smuggled into the PA-administered territories; and allowing Palestinian terrorist-operatives to be trained in various military fields in camps in Iran, Syria and Lebanon.

E. Sources

This study is mainly based on data and information appearing in the Bulletins issued by the Intelligence and Terrorism Information Center (ITIC) during 2006. They were complemented by data received from the Israel Security Agency, the Operational Division of the IDF's General Staff and from Military Intelligence. When there was a discrepancy between the sources, the data of the ITIC and the IDF's Operational Division were usually preferred. The analyses and assessments in this study were prepared by the ITIC research staff.

A. General description of anti-Israeli terrorism, 2006 B. Comparison between terrorism of 2006 and the previous years C. Factors influencing the nature and extent of Palestinian terrorism, 2006 D. Syrian-Iranian support for the terrorist organizations E. Sources

A. The PA in the shadow of the Hamas government B. The security forces C. The Hamas movement

1) Overview 2) The Gaza Strip 3) Judea and Samaria

D. The Palestinian Islamic Jihad (PIJ)

1) Overview 2) The Gaza Strip 3) Judea and Samaria

E. Fatah and its various factions

1) Overview 2) The Gaza Strip 3) Judea and Samaria

F. The Popular Resistance Committees (PRC) G. The Popular Front for the Liberation of Palestine (PFLP)

4. Chapter III: The Palestinian terrorist organization buildup project, led by Hamas in the Gaza Strip

A. Background and general description B. The establishment the Executive Force by the Hamas government C. Acquiring weapons and smuggling them into the Gaza Strip D. Manufacturing weapons E. Underground fortifications F. Expanding the media infrastructure by Hamas

5. Chapter IV: Hizbullah activity in 2006

A. Overview B. Activity along the Israeli-Lebanese border C. The second Lebanon war D. The rehabilitation of Hizbullah's military infrastructure after the war E. Directing Palestinian terrorist activity in the PA-administered territories F. Failure to open a second front during the second Lebanon war G. The attempt to broaden terrorist activities in the PA-administered territories after the war H. Collecting intelligence information about Israel

6. Chapter V: Iranian and Syrian support for Hizbullah and the Palestinian terrorist organizations

A. The objectives of Iranian and Syrian support B. Support for Hizbullah C. Support for the Palestinian terrorist organizations